Kline is paying his bills, HIS attorney says

The claims of federal prosecutors to the contrary, John Kline wants it known that he is paying down the nearly $1.2 million in restitution a federal judge ordered in his bank fraud case.

“We’re on course to get everything settled up,” said Paul Rosenberg, Kline’s attorney.

In recent weeks, the U.S. attorney’s office in Des Moines filed a notice to garnish Kline’s tax-protected college education fund and received a court order to seize $9,800 that was taken during an investigation of a fire at Kline’s former residence in Urbandale.

The implication of the filings is that Kline has paid little - $26,900, based on figures in court documents - toward the restitution that Chief Judge James Gritzner of U.S. District Court said was owed to three banks that prosecutors said Kline and business partner Randal Walters defrauded.

Kline was sentenced to 2 ½ years in prison in April and ordered to pay $1.17 million after pleading guilty to two counts of bank fraud. Walters was sentenced to one year and one day in prison and ordered to pay $500,000 in restitution after pleading guilty to bank and wire fraud.

Of the two, Kline is the business partner who has the attention of federal prosecutors attempting to collect for the banks.

One of those banks, West Des Moines-based First Bank, said it has agreed to apply $450,000 in “considerations” toward the $701,777 it is owed. Under the restitution order, First National Bank Midwest and Keokuk State Bank are each to receive $233,856.

According to Polk County land records, the three banks participated in a mortgage for the amount of the restitution that was secured by a warehouse in Ankeny. Kline signed the mortgage as president of Cortina Land Co. LC. The mortgage was recorded in May, a month after Kline pleaded guilty to bank fraud. The warehouse was sold last month to Graham Warehouse LP for $2.75 million. Rosenberg said the $450,000 represented a negotiated value for Kline’s interest in the property, which was applied toward his restitution. Des Moines-based The Graham Group Inc. is the general partner of Graham Warehouse LP, according to property records.

Regarding the college fund, Rosenberg said his client had agreed to release those funds before the garnishment notice was filed. The fund had a value of between $10,000 and $20,000, he said.

Kline wants to have all of the debts behind him when he is released from prison, Rosenberg said.

“He’s trying to get out in good shape,” he said. “This will all be paid.”